When a consumer has a bad experience involving a company’s products – be it purchasing a car with a safety defect, becoming the victim of a data breach or having baggage lost by an airline – you might think he or she wouldn’t care too much about the business’s good intentions.
But the opposite appears to be true. When deciding whether to report a negative incident, customers seem to be more influenced by whether they think the company is friendly, sincere and well-intended – a quality that marketing academics and practitioners call “brand warmth” – than by whether they think the company can produce high-quality products, or what marketers call “brand competence.”
That’s the key finding of our team’s recent research, which was published in March 2024 in the Journal of the Academy of Marketing Science.
We wanted to understand how brand identity affects customers’ willingness to report problems. So, we analyzed more than 500,000 reports of product-harm incidents that vehicle owners submitted to the National Highway Traffic Safety Administration between 2005 to 2021.
Holding other factors constant, we found that the “warmer” an automotive brand is, as judged by Young and Rubicam’s “brand asset valuator” data, the more likely customers are to report problems involving its products.
In fact, for the average automaker in an average year, a one-percentage point increase in brand warmth was associated with nearly 100 additional reports. Meanwhile, brand competence had no effect.
At first glance, this suggests that being nice is bad for business. But first glances can be misleading. When we looked deeper into the data, classifying consumers’ descriptions of the incidents as either feedback intended to help the company improve or complaints intended to punish, we found that consumers were motivated to provide feedback to warmer companies.
Every percentage-point increase in brand warmth was linked to a 4% increase in the proportion of feedback reports.
Why it matters
As marketing professors, we study why consumers make the choices they do so that companies can better serve them. Because businesses spend a lot of time and money trying to create an image that appeals to consumers, they would benefit from knowing what qualities consumers value and how that affects their decision-making.
Our research suggests a company like Ford – a brand that scores high in warmth – might gain more from investing in customer service than a company with a low warmth score, such as Rolls-Royce.
It also offers lessons for managers at high- and low-warmth companies alike. For example, we found that managers can win back consumers if they respond to customers’ reports of negative incidents by acknowledging the customer’s desire to offer feedback.
Finally, our research adds to a larger body of work about decision-making. Earlier research in psychology has suggested that people judge others by their intentions first and their ability to act on those intentions next. Interestingly, researchers have found that the opposite order prevails when consumers judge companies. Our work complicates this picture further.
What’s next
Our team is working to build a tool that will, we hope, help businesses retain customers who report data breaches, service failures or other bad experiences. Specifically, we are training a large language model that will help managers respond to customer complaints.
Unlike generative AI tools such as ChatGPT, which are trained on vast amounts of data available on the internet, our tool will be trained on complaints sourced from regulatory agencies and the Better Business Bureau, as well as company responses. Our model will distinguish between responses that elicit consumer disputes and responses that don’t, and so generate responses that will help the company retain customers. We intend to test and improve the model as the regulators and third parties update their databases.
The Research Brief is a short take about interesting academic work.